Taxes Consolidation Act 1997 section 726

Investment income

Section 726 provides for the taxation of investment income earned by an overseas life assurance company that carries on business through a branch or agency in the State.

• Investment income from the basic life assurance fund of an overseas life assurance company is charged to corporation tax under Schedule D Case III, including distributions received from Irish-resident companies and foreign distributions (grossed up by any corresponding tax credit).
• Only a portion of total worldwide investment income is taxable in the State, determined by the formula (A × B) ÷ C, where A is total investment income, B is average liabilities to policyholders whose policies were issued through the Irish branch, and C is average liabilities to all policyholders — excluding pension, general annuity and special investment business throughout.
• Liabilities are the net actuarial liabilities as valued for the periodical insurance return, and the average for an accounting period is 50 per cent of the aggregate of the opening and closing liabilities for the relevant valuation period.
• Where the average of branch liabilities exceeds the mean value of the assets to which the chargeable gains rules apply, the amount included in profits in respect of those gains is scaled up by the formula (A × B) ÷ C, and the single source rule under section 70(1) does not apply to the investment income charged under this section.